Posted on 12/08/2016 12:09:56 PM PST by Brad from Tennessee
Last in, first out? I’m going to school for accounting, that’s something I should learn.
It is a means or recording the cost of items sold (since the prices of lot you buy vary over time); if you but 100 widgets at $50 each, then another batch of 100 for $60 each, you need a consistent means to record the profit when you sell 150 of them at once for $100 apiece. Do you record them under FIFO (first in, first out), under which you sold 100 that cost you $50 and 50 that cost you $60? Or do you use LIFO (last in, first out), under which you sold 50 that cost you $50 and 100 that cost you $60? I believe another way lets you use average pricing; in the end it helps determine not just the profit on sale but the cost of your remaining inventory.
Ha haaaaaa!!!
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